Chemtura Corp’s U.S. operations filed for Chapter 11 bankruptcy protection Wednesday but its international operations, including the chemical plant in Elmira, are not included in the filing and are expected to continue without interruption.
“It’s a Chapter 11 filing for U.S. entities only,” said Dimitri Makres, manager of the Elmira plant. “The Canadian entity and all of our non-U.S. entities are not part of this filing.”
Unlike a Chapter 7 bankruptcy, where a corporation’s assets are sold off, Chapter 11 is used to reorganize a business.
“It gives us breathing room to restructure our corporate finances in the U.S.,” said company spokesperson John Gustavsen. “This will allow our operations to focus on serving our customers without the liquidity pressures that we’ve been experiencing in the last few months.”
Chemtura’s financial situation has grown increasingly dire in the past few months, with declining sales, big losses on its last quarterly report, and a plummeting share price.
A sharp decline in customer demand in November and December led to a $726 million operating loss for the last quarter of 2008 and a $3.04 loss per share. Chemtura’s share price has been falling for months, closing at a low of 10 cents on Monday.
In light of the bankruptcy filing, Chemtura’s stock was delisted from the New York Stock Exchange on Thursday.
The company announced a number of cost-saving measures over the past few months, including cutting 20 per cent of its financial and administrative staff or 500 positions, which will save $50 million annually. Other measures include suspension of dividend payments, reduction in spending and working capital and running plants, including the Elmira facility, on a make-to-order basis.
The bankruptcy filing includes $400 million in debtor-in-possession financing from Citibank. Gustavsen said the loan will help the company go ahead with day-to-day operations, and personnel and production will not be affected by the filing.
The company will also continue to meet its obligations toward environmental cleanup in Elmira, Gustavsen said.